Edition

Review of Offshore Life and Annuity Jurisdictions’ Reinsurance Landscapes

Background and Purpose

The use of offshore reinsurance continues to expand, with both insurers and reinsurers exploring offshore reinsurance opportunities and capacity, including captive and sidecar set-ups. The requirements for establishing and maintaining an offshore reinsurance vary by jurisdiction.  Consequently, there may be strategic reasons for setting up operations in a particular domicile. As insurers and reinsurers look to effectively manage their business and monitor regulatory activity, there has been increased interest to better understand offshore reinsurance jurisdictions.

The purpose of this project is to examine some of the lesser known jurisdictions that allow offshore reinsurance such as Cayman, Barbados, Puerto Rico and other jurisdictions and objectively compare and contrast them to more commonly established jurisdictions like Bermuda. The study will create a resource for life and annuity companies to assist them in their evaluation of the potential landscapes to optimize capital management. The resource can also be used by policymakers as they consider companies use of offshore reinsurance and assess its impact to existing insurance industry requirements.

Research Objective

The Society of Actuaries Reinsurance Section is seeking researchers to identify the possible jurisdictions for offshore reinsurance and objectively compare and contrast the landscapes. This should include both jurisdictions in which offshore reinsurance is commonly established as well as other jurisdictions The researchers will review existing literature, regulations, publicly available information of recent transaction data, survey/interview regulators, associations or life and annuity companies, or perform other research methods to complete the study. The following are examples of proposed topics that may be addressed for each jurisdiction:

  • Current market and trends for each jurisdiction with discussion/estimates of future market growth.
  • Requirements in establishing offshore reinsurance such as capital frameworks and how might it vary by structure such as traditional, captive reinsurance, or reinsurance sidecar.  
  • Summary of similarities and differences of the requirements.
  • Current and possible future insurer, reinsurer, and regulator considerations in setting up offshore reinsurance.
  • Lessons learned in establishing offshore reinsurance,
  • Other pertinent information in establishing offshore reinsurance.

Results of the research will be summarized in a report to be published on the SOA website and inform the reader st a minimum of: 

  • Common considerations of these jurisdictions for offshore reinsurance, both from the ceding company and the reinsurance company perspectives.
  • Summary of past transactions in these jurisdictions, including more novel structures (e.g. sidecar, captive).
  • The growth and development of these jurisdictions’ reinsurance markets.
  • Summary of requirements and regulatory environment for the jurisdictions.
  • Key considerations and possible circumstances that may promote future growth of these jurisdictions’ reinsurance markets.
  • Summary of the similarities and differences among the jurisdictions studied.

The report will also include quantitative elements that show direction and magnitude to support any of the more qualitative analysis.

A project oversight group will work with the researcher to finalize the offshore jurisdictions to be examined and provide other guidance to the researchers as needed.

Proposal Requirements

To facilitate the evaluation of proposals, the following information should be submitted:

  • Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
  • An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
  • A description of the expected deliverables and any supporting data, tools or other resources.
  • Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.

    Please note that as a policy, the SOA Research Institute generally does not provide funding to cover academic institution overhead expenses.

    As a guide for developing the project budget, please review the Historical Project Cost Guide (see Appendix)
  • A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions. The Reinsurance Section is interested in completing this project in a timely manner.  Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
  • Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.

Selection Process

The Reinsurance Section will appoint a Project Oversight Group (POG) to oversee the project.  The [sponsoring entity/POG] is responsible for recommending the proposal to be funded. Input from other knowledgeable individuals also may be sought, but the POG will make the final recommendation, subject to Society of Actuaries Research Institute (SOA) leadership approval. An SOA staff research actuary will provide staff actuarial support.

Questions

Any questions regarding this RFP should be directed to Research-ML@soa.org.

Notification of Intent to submit Proposal

If you intend to submit a proposal, please email written notification by April 17, 2024 to Research-ML@soa.org.

Submission of Proposal

Please email your proposal to Research-ML@soa.org; proposals must be received no later than April 29, 2024 It is anticipated that all proposers will be informed of the status of their proposal by the end May 2024.

Conditions

The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries Research Institute and the researcher.

The Reinsurance Section reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The Society of Actuaries Research Institute also reserves the right to redirect the project as is deemed advisable.

The Society of Actuaries Research Institute plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).

The Society of Actuaries Research Institute may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the [Society of Actuaries/sponsoring entity] in publicizing or promoting the research and responding to media requests.

The Society of Actuaries may also choose to market and promote the research to members, candidates and other interested parties. You agree to perform promotional communication requested by the Society of Actuaries Research Institute, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.

Conflict of Interest

You agree to disclose any of your material business, financial and organizational interests and affiliations which are or may be construed to be reasonably related to the interest, activities and programs of the Society of Actuaries Research Institute.

Appendix

The cost ranges below are intended as a guide for budgeting project costs for proposals in response to SOA Research Institute Request for Proposals (RFP). Please note these figures span the 33rd to 66th percentiles for all projects as well as projects that involve a specific approach (lit review, survey, etc.). They are based on historical costs over several recent years. Expected costs for some RFPs may fall outside these ranges depending on the nature of the work and resources required for completion.

All Contracted Projects

This category includes all contracted projects that the Institute has undertaken within the last several years.

The 33rd-66th percentile project costs range is $25,000 - $50,000.

Literature Reviews

This category includes projects that involved only a literature review or the cost for the portion of a larger project that included a literature review. 

The 33rd-66th percentile project costs range is $15,000 - $20,000.

Surveys

This category includes all projects that had a survey as their primary component. 

The 33rd-66th percentile project costs range is $28,000 - $55,000.